the student debt revolt begins

I have often been a critic of the higher education system. My critique, roughly, is that the costs of college are often disconnected from the market value of the degree. Students are often left with substantial debt that may take a decade or more to pay off. Some, without proper counseling, take on the debt normally associated with buying a home. It is no longer the case that college finances are a matter of saving up some money for a few years or working it off over a few summers. Now, students can carry debt into their forties, or later, if they aren’t careful. This debt can displace other, possibly more important, forms of wealth building such as purchasing a home, financing a business, or simply saving the money.

Today, there is an effort to organize college loan debtors in an attempt to roll back this trend. The Debt Collective, an activist group, announced today that a group of fifteen volunteers will go on a debt strike. These former students all have debt acquired from their time in various for-profit colleges. I applaud this movement. But I think it needs to go farther. Why stop at for-profit colleges? It is the case that some for-profits have acted dishonestly in promising much higher wages and encouraging students to maximize loans. But many students from more traditional colleges leave with very debt loads as well and often with degrees that don’t correspond to better jobs. An excellent start and I hope to see more.

3 Responses

This is a very inspiring story, and I am glad to see students taking this kind of action. Indeed, the debt levels that many students leave for-profit, many private not-for-profit, and some public institutions with are immoral, as are predatory master’s programs that charge students $50k+ for degrees that may not provide demonstrable benefit. However, I do often become concerned in these discussions that we be careful about the ultimate message–many students end up with the idea that ALL debt is bad and make their decisions about school, work, and financial aid with the goal of avoiding all loans, even when a small loan would vastly increase their longer-term likelihood of success. I wish we could do a better job of distinguishing between students who take $5k or so a year and the students who graduate with six figures of debt that they will never be able to pay back, because not making that distinction clear is discouraging too many working-class and poor students from pursuing four-year college degrees.

median salary of HS graduates age 25-34: $30,000. I couldn’t quickly find figures on the average or median salary of 18-22 year old HS graduates, but it’s likely substantially less than $30,000.

Note that the unemployment rate among HS graduates is much higher than the unemployment rate of college graduates, even those with liberal arts degrees. Wage growth curves are flatter, too.

Even ignoring differences in employment risk, wage growth curves, and the likely overestimate of HS grads’ starting salaries, these data imply that the average visual arts major graduating from a public school with average debt loads can expect to pay off his or her debt in 5 years.

Granted, the average college-graduate-in-visual-arts may have earned higher wages than the average HS graduate, even without a degree. Then again, s/he may have made less, too: after all, the skills that lead students to major in the visual arts are not exactly those that lead to the few, well-paying jobs available to young HS graduates.

I’m sure there are workers out there with visual arts and other low-paying majors who have higher-than-average debt and lower-than-average employment prospects, and who will need more than 5 years to recoup their investment. But in the absence of a priori ways to identify these students before they take on debt to go to college, it’s hard to justify a policy of discouraging students from going to college.

It’s not that having a college degree guarantees “middle class” wages anymore. It doesn’t. But, NOT having a college degree pretty much guarantees abysmal employment prospects, unless you are fortunate enough to be born into wealth, a family business in construction, or to upper middle class parents (ala the Gates) who can buffer the risk of stopping at a HS degree.

I remember when in the 1970s the law was passed to make it impossible to bankrupt your way out of student loan debt. Bankruptcy laws have tightened against middle and low income people in other ways since then, too. More liberal bankruptcy laws for regular people is one way to even the field against predatory lending practices.